Page 14 - Q&A 2019/2020

New Mining BEE Charter Guidelines help clarify
the emphasis on local procurement BEE

February 2019

“My business works exclusively in the mining industry providing goods and
services to mining companies. I understand the recent Mining Charter
guidelines are quite important for suppliers like myself that work in this industry.
Is there anything specific I should be aware of?”

The Mining Charter 2018 (“Mining Charter”) was published on 27 September
2018 with the Implementation Guidelines to the Mining Charter (“Guidelines”)
published on 19 December 2018.

The Guidelines provide mining rights holders with detailed explanations
and calculated examples on how to comply with the requirements of the
Procurement, Supplier and Enterprise Development scorecard elements
contained in the Mining Charter.
In this regard, the following aspects can be highlighted:
Calculation and Verification of Local Content

There is a strong emphasis on local procurement and manufacturing within the
South African mining and mineral industry and it is required that mining right
holders should procure 70% of mining goods and 80% of mining services from
South African based companies. This is good news for any business that will
qualify in this bracket.
The Guidelines provide detailed formulas and examples on the calculation of
local content. Mining goods with a local value add of 60% or greater will be
considered South African manufactured goods, whilst mining goods with a
local value add below 60% will be deemed not locally manufactured.

The Guidelines also stipulates that local content verification needs to be
carried out by the South African Bureau of Standards (SABS). Should the mining
rights holder pay for such verification of a developing supplier, the cost will be
interpreted as part of supplier development costs. Verification certificates from
SABS will however not be required during the first two years of the transitional
period of the Mining Charter.

Budget Categories for the Procurement of Mining Goods and Services
In order to achieve inclusive procurement, mining companies must ensure
that 21% of their total South African mining goods procurement and 50%
of procurement spend on services, is sourced from South African based
companies that qualify as Historically Disadvantaged Persons Owned and
Controlled Companies.

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